The Balanced Approach Versus Hedge Fund Managers Getting Off Scot-Free

Winning Progressive
July 25th, 2011

The contrast between the competing approaches of President Obama and the House Republicans to the debt ceiling and deficit reduction was perfectly crystallized when both our President and House Speaker John Boehner (R-OH) gave speeches on these issues on Monday night.  On the Democratic side is the balanced approach that calls for everyone – including hedge fund managers, corporate jet owners, and other wealthy Americans who have made out like bandits over the past thirty years – to help reduce the deficit.  On the GOP side, Speaker Boehner continues to promote his “Cut, Cap, and Balance” plan that lets the wealthy get off scot-free by requiring $0 in revenue increases while imposing $5.5 trillion in cuts on programs that benefit the middle class, working class, and poor.

Below are some highlights from President Obama’s speech.  After you read them, please heed President Obama’s call and contact Congress in favor of the balanced approach:

The American people may have voted for divided government, but they didn’t vote for a dysfunctional government. So I’m asking you all to make your voice heard. If you want a balanced approach to reducing the deficit, let your Member of Congress know. If you believe we can solve this problem through compromise, send that message.

If you agree, call your Representative and Senators and let them know how you feel.  We’ve heard that the Congressional switchboard is overloaded with calls, so your best bet is to try the district office numbers, which can be found here.

Here are a few highlights from President Obama’s speech.

First, the President reminded us that how our budget surplus was wasted during the W. Bush Administration, a point that is also well illustrated by this chart:

In the year 2000, the government had a budget surplus. But instead of using it to pay off our debt, the money was spent on trillions of dollars in new tax cuts, while two wars and an expensive prescription drug program were simply added to our nation’s credit card. As a result, the deficit was on track to top $1 trillion the year I took office.

Next, President Obama explains the balanced approach to deficit reduction:

The first approach says, let’s live within our means by making serious, historic cuts in government spending. Let’s cut domestic spending to the lowest level it’s been since Dwight Eisenhower was President. Let’s cut defense spending at the Pentagon by hundreds of billions of dollars. Let’s cut out the waste and fraud in health care programs like Medicare – and at the same time, let’s make modest adjustments so that Medicare is still there for future generations. Finally, let’s ask the wealthiest Americans and biggest corporations to give up some of their tax breaks and special deductions.

This balanced approach asks everyone to give a little without requiring anyone to sacrifice too much. It would reduce the deficit by around $4 trillion and put us on a path to pay down our debt. And the cuts wouldn’t happen so abruptly that they’d be a drag on our economy, or prevent us from helping small business and middle-class families get back on their feet right now.

This approach goes farther on spending cuts than we here at Winning Progressive would like, especially given that the key to reducing the short term deficit is getting the economy moving again, not cutting spending.   But with the GOP holding our entire economy hostage, it is clear that some cuts to government spending and deficit reduction will have to occur in order to avoid default, and this balanced approach is by far more reasonable than anything the GOP is proposing.   Note also that, contrary to the unsubstantiated rumors floating around various blogs, the President has reiterated that he wants to make Medicare more sustainable by rationalizing health care spending, not by cutting benefits.

The President then contrasted his balanced approach with the ask-nothing-of-the-wealthy approach taken by the Republicans:

The only reason this balanced approach isn’t on its way to becoming law right now is because a significant number of Republicans in Congress are insisting on a cuts-only approach – an approach that doesn’t ask the wealthiest Americans or biggest corporations to contribute anything at all. And because nothing is asked of those at the top of the income scales, such an approach would close the deficit only with more severe cuts to programs we all care about – cuts that place a greater burden on working families.

So the debate right now isn’t about whether we need to make tough choices. Democrats and Republicans agree on the amount of deficit reduction we need. The debate is about how it should be done. Most Americans, regardless of political party, don’t understand how we can ask a senior citizen to pay more for her Medicare before we ask corporate jet owners and oil companies to give up tax breaks that other companies don’t get. How can we ask a student to pay more for college before we ask hedge fund managers to stop paying taxes at a lower rate than their secretaries? How can we slash funding for education and clean energy before we ask people like me to give up tax breaks we don’t need and didn’t ask for?

That’s not right. It’s not fair. We all want a government that lives within its means, but there are still things we need to pay for as a country – things like new roads and bridges; weather satellites and food inspection; services to veterans and medical research.

Next, the President explains how the debt ceiling only became a problem when the crazies who run today’s Republican Party decided that taking our economy hostage is a reasonable way to try to achieve their ideological agenda:

In the past, raising the debt ceiling was routine. Since the 1950s, Congress has always passed it, and every President has signed it. President Reagan did it 18 times. George W. Bush did it 7 times. And we have to do it by next Tuesday, August 2nd, or else we won’t be able to pay all of our bills.

Finally, President Obama reminded us all what will happen if the Republican hostage takers succeed in preventing an increase in the debt limit:

If that happens, and we default, we would not have enough money to pay all of our bills – bills that include monthly Social Security checks, veterans’ benefits, and the government contracts we’ve signed with thousands of businesses.

For the first time in history, our country’s Triple A credit rating would be downgraded, leaving investors around the world to wonder whether the United States is still a good bet. Interest rates would skyrocket on credit cards, mortgages, and car loans, which amounts to a huge tax hike on the American people. We would risk sparking a deep economic crisis – one caused almost entirely by Washington.

Increasing the debt ceiling is absolutely imperative, but we also must not give in to the pathological intransigence of the GOP on this issue.  Therefore, contact your Congresspeople and let them know that you want a balance approach to raising the debt ceiling, rather than crashing our economy simply so hedge fund managers and corporate jet owners can get off scot-free.

http://www.winningprogressive.org/a-tale-of-two-speeches

Copyright 2011 Winning Progressive